Given the ubiquity of substance use among adolescents relative to subsequent substance-related disorder and health consequences in adulthood, it is a public health challenge to identify which adolescents are at risk for long-term substance-related problems. The study of developmental pathways places adolescent behavior in the larger context of the life course and offers an important tool for understanding how underlying etiological mechanisms may identify different subgroups of adolescents at risk for long-term problems related to substance use. An understudied developmental pathway, the internalizing pathway, characterizes substance use as a form of coping with ongoing emotional distress and dysregulation that result in substance use, coping motives for use and related consequences of use beginning in adolescence. Existing studies offer inconsistent support for the associations between emotional distress and substance use in adolescents and few studies consider these associations relative to the peer context. The peer context is central to healthy adolescent development and strongly implicated in both substance use and emotion distress. Emotional distress affects adolescents' ability to successfully negotiate peer relationships, as potentially reflected in fewer opportunities to make friends, lower social status, and greater vulnerability to deviant peer influence. Furthermore, some youth may be particularly at risk for social deficits related to emotional distress and attendant substance use based on biological, cognitive, and family vulnerability factors that reinforce the use of substances to cope, provide opportunities for using substances to cope, or provide few coping alternatives for distressed youth. The current proposal is the first prospective study to use social network analysis to examine the role of peers in the internalizing pathway to substance use and disorder. In this secondary data analysis of over 6,500 adolescents assessed from middle to high school, we use innovative analytic methods including SIENA, a specialized software program for capturing peer selection and influence processes within evolving social networks in longitudinal designs. Our proposal tests three aims. Aim 1: We examine multiple indicators of peer relationships (social integration and social standing) as moderators and mediators of bidirectional associations between emotional distress (anxiety and depression symptoms) and substance use outcomes (use, motives, consequences) from middle through high school. Aim 2: We examine whether longitudinal associations among emotional distress, substance use, and peer relationships vary in magnitude depending on vulnerability factors at the biological, cognitive, and family levels. Aim 3: We examine whether emotional distress moderates the effects of peer selection and influence on substance use, controlling for other relational attributes in the social network and relevant vulnerability factors. Resulting findings will identify early markers of risk processes that underlie a pernicious pathway to substance use and disorder as well as vulnerability factors needed to identify individuals at risk for subsequent substance-related problems.